Yellen says that “difficult choices” must be made if the debt ceiling is not raised
- Treasury Secretary Janet Yellen said Sunday that “tough choices” must be made about which bills will remain unpaid if the debt ceiling is not raised.
- President Joe Biden said Republicans “must move from their extreme position” during a news conference ahead of his departure from the Group of Seven summit in Japan.
- House Speaker Kevin McCarthy told reporters Saturday that the White House had “moved backwards.”[ads1];
Janet Yellen, US Treasury Secretary, speaks at the Independent Community Bankers Of America (ICBA) Capital Summit in Washington, DC, US, Tuesday, May 16, 2023.
Nathan Howard | Bloomberg | Getty Images
Treasury Secretary Janet Yellen said Sunday that “tough choices” must be made about which bills will remain unpaid if the debt ceiling is not raised.
Yellen reaffirmed her warning that the US could default on its debt as early as June 1, which she has said could cause widespread “economic chaos”. There won’t be any good results if Congress doesn’t take action, she said.
“We are focused on raising the debt ceiling, and there will be tough choices if that doesn’t happen,” she told NBC’s “Meet the Press.” “There cannot be acceptable outcomes if the debt ceiling is not raised, regardless of what decisions we make.”
Raising the debt ceiling is necessary for the government to meet spending obligations already approved by Congress and the president to prevent defaults. Raising the debt ceiling does not authorize new spending, but House Republicans have said they will not lift the limit if Biden and lawmakers do not agree to future spending cuts.
As a result, discussions on Capitol Hill have been tense.
President Joe Biden said Sunday that Republicans “must move from their extreme position” during a news conference before his departure from the Group of Seven summit in Japan. After negotiations broke down late Saturday, Biden said he planned to call House Speaker Kevin McCarthy, R-Calif., on his way back to Washington.
“It’s time for Republicans to accept that there is no bipartisan deal to be made solely, solely, on their partisan terms,” Biden said.
McCarthy told reporters on Saturday that the White House had “moved backwards”, adding that he did not believe negotiations would be able to move forward until Biden returned to the US
At the Independent Community Bankers of America Capital Summit on Tuesday, Yellen said the White House Council of Economic Advisers found that a default could lead to an economic downturn as bad as the Great Recession, with 8 million Americans losing their jobs and the stock market falling by about 45 %.
She also noted a Moody’s Analytics report that found similar numbers with more than 7 million Americans out of work and $10 trillion in household wealth evaporated. Yellen also warned that a breach of the debt ceiling could affect important public services.
Biden said Sunday that he believes a deal can be reached with Republicans, but that it is not certain.
“I can’t guarantee they won’t force a default by doing something outrageous,” he said.